Every legacy is unique; there is not a “one size fits all” approach to the creation of an estate plan. With every estate plan, which might include one or more trusts, understanding the goals of the family or business is critical.

It is also important to remember that goals and circumstances can change throughout the lifecycle of a financial plan. Revisiting your plan frequently is important. Why establish a trust? Below are examples of different stages in which people may find themselves when a trust might work for them.

Why establish a trust? A trust can offer protection

This is often the entrance point for people who realize the need to create a trust. This occurs when an individual or business owner begins to identify the need for strategic planning to ensure the safety of his or her finances and the continuity of financial management.

The first step of this stage is to identify the goals of the estate plan and consider establishing a trust structure. During this phase, working to identify business or other asset growth potential and establish long-term planning is key. Through this initial process, the foundation is laid for readjustments that may be needed as goals shift or change over time.

By working with individuals to establish goals such as business or other asset growth, a tax savings plan, and a gifting strategy, substantial amounts of money might be saved. This is a point where individuals, along with their financial advisors, may decide to create a trust that cannot be changed.

Why establish a trust? A trust can ensure a legacy

A trust can help establish a legacy that may last for generations. Setting up trusts for children or grandchildren who may be too young to manage finances for themselves or establishing a process for distribution of wealth over the long term, is often a strategic step in building meaningful inheritance plans.

This is also the time where, if possible, people start thinking about setting up a foundation or establishing gifting strategies to charities. There are many aspects to consider that stretch far beyond finances; for example, trusts can be established for fine art pieces and collectibles as well.

Why establish a trust? A trust can support peace of mind

As individuals move into the latter phases of their financial lifecycle, questions can begin to arise. This often starts when people are nearing retirement. They have planned for their legacy and feel financially comfortable. However, now that retirement is closer, they now wonder, “Am I going to be able to continue living the life I am used to?” Trusts can work to ensure that retirement is properly funded and individuals can continue living the lives they are accustomed to with the money they have.

Additionally, using a trust to plan for the end of the financial lifecycle is a way to provide peace of mind for individuals and their families, so that bills can be paid and investments managed even in the event of disability. Living trusts (trusts that can be revoked during lifetime where the trust creator serves as the trustee initially) can be beneficial as people age, especially if they become mentally or physically impaired. A living trust can also help relieve family burden and ensure a smooth transition when an individual passes away, by naming a successor trustee to step in and continue to manage the trust.

Estate planning is critical to establishing a legacy and helping achieve an individual’s dreams and goals. At UMB Private Wealth Management, we recommend reassessing your estate plan at least every five years, or sooner if major life changes have occurred, to ensure it is working to meet individual needs and reflects current life circumstances. There are many different types of trusts that can be established for any aspect of needs, and we work to find unique solutions for every client.

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Susan Teson is executive vice president and chief fiduciary officer for UMB’s Private Wealth Management division. She supervises all fiduciary activities and associates for UMB, and manages Private Wealth Management’s legal, fiduciary tax and real estate and unique asset teams. She joined UMB in 1992 and has been a licensed attorney for more than 30 years. She is also a Certified Financial Planner.

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